repurchase agreements

A repurchase agreement (or repo) is a short-term financial transaction where one party sells securities (like government bonds) to another with an agreement to buy them back later at a slightly higher price. Essentially, it's like a short-term loan secured by securities. The seller gets cash now, and the buyer earns interest when the securities are repurchased. Repos are commonly used by banks and financial institutions to manage liquidity efficiently and ensure quick access to cash, often lasting from overnight to several days.